Capitaline

Results 14-Jan-23

Analysis

L&T Finance Holdings

Retail disbursements jump 53% in Q3FY2023

L&T Finance Holdings has recorded 39% jump in net profit to Rs 453.64 crore in the quarter ended December 2022 (Q3FY2023). The consolidated income from operations increased 16% to Rs 3321.63 crore for Q3FY2023, while other income of the company declined 25% to Rs 169.38 crore. The total income increased 13% to Rs 3491.01 crore for Q3FY2023.

Interest expenses increased 7% to Rs 1500.69 crore. Operating expenses moved up 28% to Rs 714.45 crore, allowing the operating profits to improve 12% at Rs 1275.87 crore. The cost-to-income ratio was higher at 35.9% in Q3FY2023 from 32.9% in Q3FY2022.

Depreciation increased 16% to Rs 28.27 crore, while provisions fell 13% to Rs 641.72 crore. Profit before tax surged 64% yoy basis at Rs 605.88 crore.

There is exceptional expense of Rs 2687.17 crore. As part of Lakshya 2026 strategy, the company has decided to reduce its wholesale loan asset portfolio in the near term through accelerated sell down. Based on the change in business model, the wholesale loan assets previously measured at amortised cost have been reclassified and measured to fair value through profit and loss as on 1 October 2022. The one-time impact of such reclassification consequent to change in business model and fair valuation of the wholesale loan asset portfolio, amounting to Rs 2687.17 crore has been presented as exceptional items.

The company has reversed tax provisions of Rs 353.51 crore in Q3FY2023. There is profit of Rs 2180.59 crore from discontinued operations. Net Profit of the company, after share in profit of associates and non-controlling interest, improved 39% to Rs 453.64 crore for Q3FY2022.

Business highlights:

Retail portfolio mix at 64% end December compared to 58% in the quarter ended September 2022

Retail book at Rs 57000 crore, up 34% YoY; led by key products - Rural Business Finance, Farm Equipment Finance and Two- Wheeler Finance

Retail disbursements at Rs 11607 crore, up 53% YoY and up 13% QoQ (Quarter-on-Quarter)

Net Interest Margin (NIM) + Fees at 8.80%, up 70 basis points (bps) YoY due to changing portfolio mix towards retail. Retail NIM+Fees reached 11.38% in Q3FY23, up 25 bps YoY

Gross Stage 3 (GS3) stood at 4.21% - Rs 3723 crore end December 2022, down by 248 bps compared with 6.69% - Rs 5623 crore end December 2021

Net Stage 3 (NS3) at 1.72% - Rs 1487 crore end December 2022, down by 145 bps compared with 3.17% - Rs 2565 crore end December 2021

Improved Retail Asset Quality with GS3 at 3.47% (down 38 bps YoY) and NS3 at 0.73% (down 45 bps YoY)

Capital adequacy ratio at 23.49% (Tier 1: 20.61%; Tier 2: 2.88%); adequate liquidity buffers in place

Strategic initiatives for achieving Lakshya 2026 remain on track

Concluded divestment of the mutual fund business and received sale consideration of Rs 3485 crore along with surplus cash balance Rs 764 crore, thereby aggregating to Rs 4249 crore

Consequent to change in business model in order to enable Accelerated sell-down of Wholesale book, a One-time provision of Rs 2687 crore has been made during the quarter

Rated ‘AAA' by CRISIL, ICRA, CARE and India Ratings

Commenting on the financial results, Dinanath Dubhashi, Managing Director & CEO, L&T Finance Holdings said, “We are progressing well on our journey towards Lakshya 2026 to become a top class, ‘digitally-enabled', ‘customer-focused', retail finance company. Our results in Q3FY23 not only highlight our robust business strengths, but also reflect our continued focus on accelerated retailisation, with the retail portfolio mix reaching 64%. On the strategic initiatives front, we have recently concluded the sale of our mutual fund business and are progressing well on our retailisation journey consisting of two major pillars, namely ‘Strong Retail Growth' and ‘Accelerated sell-down of Wholesale portfolio'. We have also created adequate provisions to support the accelerated sell-down process. With a view to further strengthen the Fintech franchise, the Company continued to emphasize on digitisation, data analytics and customer-facing applications, with a clear focus on expanding the existing channels and ecosystems, and creating newer channels. Our application PLANET has recently crossed 17 lakh downloads. All these developments show that we are moving in the right direction to achieve our Lakshya 2026 goals and sustainably create value for all our stakeholders.”

Financial Performance 9MFY2023

The consolidated income from operations increased 6% to Rs 9354.41 crore for the nine-months ended December 2022, while other income of the company declined 15% to Rs 529.76 crore. The total income increased 5% to Rs 9884.17 crore for 9MFY2023. Interest expenses were flat at Rs 4352.35 crore.

Operating expenses increased 37% to Rs 1963.71 crore, causing 1% decline in the operating profits to Rs 3568.11 crore. The cost-to-income ratio was higher at 35.5% in 9MFY2023 from 28.5% in 9MFY2022.

Depreciation rose 10% to Rs 82.71 crore, while provisions fell 17% to Rs 2017.19 crore. Profit before tax surged 33% yoy basis at Rs 1468.21 crore. There is exceptional expense of Rs 2687.17 crore

The company has reversed tax provisions of Rs 73.14 crore, while profit from discounted operations stood at Rs 2265.37 crore. Net Profit of the company, after share in profit of associates and non-controlling interest, improved 54% to Rs 1122.17 crore for 9MFY2022.

L&T Finance Holdings: Consolidated Results
Particulars	2212 (3)	2112 (3)	Var %	2212 (9)	2112 (9)	Var %	2203 (12)	2103 (12)	Var %
Income from operations	3321.63	2874.37	16	9354.41	8785.42	6	11704.17	13104.85	-11
Other Income	169.38	224.75	-25	529.76	619.81	-15	619.38	648.48	-4
Total Income	3491.01	3099.12	13	9884.17	9405.23	5	12323.55	13753.33	-10
Interest Expended	1500.69	1406.59	7	4352.35	4361.53	0	5753.79	7212.62	-20
Operating Expense	714.45	557.39	28	1963.71	1436.49	37	2160.98	1783.62	21
Operating Profits	1275.87	1135.14	12	3568.11	3607.21	-1	4408.78	4757.09	-7
Depreciation / Amortization	28.27	24.28	16	82.71	74.86	10	102.64	85.66	20
Provisions and Write-offs	641.72	741.76	-13	2017.19	2430.93	-17	3083.29	3635.70	-15
Profit before EO	605.88	369.1	64	1468.21	1101.42	33	1222.85	1035.73	18
Exceptional Item	-2687.17	0	-	-2687.17	0	-	0	225.61	-
PBT after EO	-2081.29	369.10	PL	-1218.96	1101.42	PL	1222.85	1261.34	-3
Tax Expense	-353.51	112.60	LP	-73.14	244.69	LP	373.62	523.11	-29
Net Profit for the period	-1727.78	256.50	PL	-1145.82	856.73	PL	849.23	738.23	15
Share in profit/(loss) of associate company	0.00	0.00	-	0.00	0.00	-	0.00	0.00	-
Profit attributable to non-controlling interest	-0.83	-18.11	-95	-2.62	-19.98	-87	-20.87	-22.06	-5
PAT	-1726.95	274.61	PL	-1143.20	876.71	PL	870.10	760.29	14
PPA	2180.59	51.38	4144	2265.37	148.84	1422	200.01	210.65	-5
PAT after PPA	453.64	325.99	39	1122.17	727.87	54	1070.11	970.94	10
EPS* (Rs)	8.1	4.4		7.4	4.7		3.5	2.5
Adj BV (Rs)	78.3	68.3		78.3	68.3		72.6	70.4
* Annualized on current equity of Rs 2479.67 crore EO and relevant tax. Face Value: Rs 10, Figures in Rs crore
PL: Profit to Loss, LP: Loss to Profit
Source: Capitaline Corporate Database

Previous News

L&T Finance Holdings consolidated net profit rises 46.41% in the March 2023 quarter
( Results - Announcements 29-Apr-23 07:39 )

L&T Finance Holdings
( Results - Analysis 25-Jan-24 07:01 )

Stock Alert: LTIMindtree, L&T Finance, Asian Paints, Zee Entertainment Enterprises, Indian Oil Corporation
( Market Commentary - Stock Alert 18-Jul-24 08:30 )

L&T Finance Holdings allots 13.07 lakh equity shares under ESOS
( Corporate News - 29-Nov-23 17:40 )

L&T Finance Holdings fixes record date for dividend on preference shares
( Market Beat - Reports 20-Aug-21 09:57 )

L&T Finance consolidated net profit rises 10.54% in the March 2024 quarter
( Results - Announcements 29-Apr-24 07:43 )

L&T Finance Holdings update on merger of its subsidiaries
( Corporate News - 18-May-21 11:55 )

L&T Finance gets RBI nod for merger with its subsidiaries
( Hot Pursuit - 27-Mar-23 10:53 )

L&T Finance allots 8.99 lakh equity shares under ESOS
( Corporate News - 27-Apr-24 12:34 )

L&T Finance Holdings reports standalone net profit of Rs 10.35 crore in the June 2018 quarter
( Results - Announcements 23-Jul-18 17:16 )

L&T Finance Holdings consolidated net profit rises 59.47% in the June 2018 quarter
( Results - Announcements 23-Jul-18 17:02 )